Abstract
This study examines the relative wages of citizens and noncitizens employed as healthcare support workers as well as examines the effect of noncitizen support worker employment on the wages of citizen support workers. Relative wage findings reveal noncitizen support workers with less than eight years of US residency receive a noncitizen-citizen wage discount statistically significantly greater than the legal maximum of 5% below the local prevailing wage. These low relative wage levels could contribute to lower wages for citizen support workers, however elasticity of substitution findings suggest noncitizen support workers are not close substitutes for healthcare support workers who are US citizens. In addition, wage effect findings do not reveal a negative influence of noncitizen employment on the wages of native born US citizen support workers, while these findings reveal a relatively small wage decline for naturalized support workers. These findings are consistent with the citizen status job heterogeneity hypothesis. Nonetheless, finding noncitizen-citizen wage differences does not allow for ruling out the possibility of weak enforcement of prevailing wage legislation and possible employment of undocumented workers.
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Notes
Carnevale et al. (2012) predict a 26% increase from 3.6 to 4.6 million healthcare support jobs from 2010 to 2020.
Such non-wage labor cost associated with high turnover rates include the cost of hiring a new employee, incurring low productivity associated with hiring a new employee and the cost of training new hires.
Staff turnover in assisted living residences ranged from 21 to 135%, averaging 42% in 2002 (Maas and Buckwalter 2006).
Healthcare support workers’ median salary of $26,440 for 2014 is slightly higher than the official US poverty rate of $23,850 for a family of four.
Source: The Bureau of Labor Statistics, (http://www.bls.gov/opub/ted/2015/median-weekly-earnings-by-education-gender-race-and-ethnicity-in-2014.htm)
Source: Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2016–17 Edition, Home Health Aides, http://www.bls.gov/ooh/healthcare/home-health-aides.htm
Full time event (FTE) is defined as 2000 h worked.
The 2012 CNA turnover information is taken from Table-1 of the American Healthcare Association 2012 Staffing Report, which is located at the following link: https://www.ahcancal.org/research_data/staffing/Documents/2012_Staffing_Report.pdf
Monthly national turnover rates for 2012 are taken from Table-3 Column (7) of the monthly publications posted in the site labeled “2013 Job Openings and Labor Turnover” located at the following Bureau of Labor Statistics link:
https://www.bls.gov/bls/news-release/jolts.htm#2012. An alternative site posted by Compensation Force reports a turnover rate of 15.2%, http://www.compensationforce.com/2012/09/2012-turnover-rates-by-industry.html. Both rates are appreciably below the rate reported for CNAs.
A green card holder is a noncitizen who has been granted authorization to live and work in the United States on a permanent basis. In general, to meet the requirements for a green card, a noncitizen must: be eligible for one of the immigrant categories established in the Immigration and Nationality Act (INA); have a qualifying immigrant petition filed and approved (PERM); have an immigrant visa immediately available; and be admissible to the US.” Source: https://my.uscis.gov/exploremyoptions/green_card_eligibility
The immediate relative immigrant visas include five categories IR-1 to IR-5, that are available to immigrant who are spouses, children and parents of US citizens. Source: https://travel.state.gov/content/travel/en/us-visas/immigrate/family-immigration/family-based-immigrant-visas.html. The US also provides a limited number of family preference immigrant visas for more distant relatives of US citizens. This is the F visa series. Immigrants qualifying for an F series visa are also immediately eligible to petition for a green card.
Immigrant healthcare support workers are also eligible for the EB-3 employment-based visa. However, compared to the reunification visas relatively few of these visas are available to prospective immigrants.
The purpose of the labor certification process is to protect the employment and working conditions of US workers. This process requires employers to test the local labor market to evaluate whether there’s a supply of qualified US workers available to fill the proposed position. Source: http://www.antaoandchuang.com/en/permanent-residency-green-cards/schedule-b-occupations
The Immigration and Nationality Act (INA) requires that the hiring of a foreign worker will not adversely affect the wages and working conditions of U.S. workers working in the occupation in the intended employment area. To comply with the statute, the Department’s regulations require the wages offered to a foreign worker must be the prevailing wage rate for the occupational classification in the geographical area of employment. Noncitizens with a PERM certificate, green card, H-2B or E-B3 visa are examples of visas requiring adherence to the prevailing wage guidelines. Source: https://www.foreignlaborcert.doleta.gov/pwscreens.cfm
The GAO (2000) finds local prevailing wages are determined by using several methods that include previously negotiated collective bargaining agreements, employer-provided surveys of local firms in an employer’s respective industry, and wage levels by profession determined by the Bureau of Labor Statistics (BLS). This research reveals that these methods, especially employer-provided surveys, allow employers to choose the lowest wage of the three methods as a prevailing wage and might not reliably predict the local market wage for a specific occupation.
The sample size for nurse’s assistants with H2B visas is too small to allow for reliable examination of support occupation wage differentials for this group of noncitizens. It should also be noted that the employment of H2B workers could contribute to the high turnover rate for healthcare support workers because their visa is granted for immigrants applying for work on a temporary basis. Nonetheless, their small employment numbers do not suggest the possibility of a measurable overall turnover rate. In addition, H2 visa holders can still attain lengthy employment by renewing the visa to continue working with the same employer.
Hirsch and Schumacher (2004), explain match bias by indicating that the US Census allocates earnings using a “hot deck” imputation method that matches each non-respondent to an individual or “donor” whose characteristics are identical. The donor’s reported earnings are then assigned to the non-respondent. Hence, wage distortion arises due to the use of imputed wages rather than actual reported wages.
Excluding individuals not reporting their actual wage could introduce selection bias. Hence, as a robustness check, we estimated wage equations presented below for the full sample and obtained results that closely resemble the results reported in this study. Findings for the full sample are available upon request.
CPS files provide information on a much larger sample of healthcare support workers than the sample used in this study. The smaller sample arises because a nontrivial portion of the entire sample do not report their local residency. Selecting individuals reporting residency location is required when comparing citizen wages across localities. Adhering to this selection criterion does not noticeably change findings when examining descriptive statistics and citizen-noncitizen wage differences. These results using the full sample are available from the authors on request.
In order to be naturalized, an applicant must first meet all eligibility requirements for citizenship. Then, he or she must complete an application (the N-400 form), attend an interview, and pass an English and a civics test. Upon successful completion of these steps, the applicant takes an oath of loyalty, and becomes a citizen. Source: https://www.uscis.gov/citizenship/learners/apply-citizenship
Annual MSA unemployment rates are computed using annual CPS-ORG files.
Four-year intervals for tenure residency are chosen to provide a reasonable sample size of noncitizens for each tenure group.
The GLM procedure assuming error terms with Poisson, Gaussian, inverse Gaussian and binomial distributions was also used to estimate equation (1). The results using these distributions mirrors the results using the gamma distribution.
Seventeen of the eighteen variables arise from constructing a measure of the noncitizen/citizen ratio for the 1994 population reporting as being in the labor force, and then interacting this ratio with one-year dummy variables (year dummies for each of the years 1996–2012). These variables mimic those used by Dustmann et al. (2013). The remaining instrument mimic that used by Altonji and Card (1991). The test of weak instruments suggests that the minimum eigenvalue statistic is 436.166, which exceeds the critical value of 21.34 for relative bias value at the 5% level and exceeds the critical values of 57.53 and 3.20 for the 5% two-state least square size nominal Wald test and LIML size nominal Wald test pertaining to Stock and Yogo’s (2005) second characterization of weak instruments. In addition, the test for over-identification reveals a Sargan score (chi2(17)) of 18.9076 and p value of 0.3339, which suggests we cannot reject the null hypothesis that our instruments are valid at the standard levels of statistical significance.
The Box-Cox transformation of the NC/C ratio is ((NC/C)’ = [(NC/C)θ – 1]/θ, where the symbol θ is estimated using the profile likelihood function. For this estimation θ = 0.066109.
Note that percentage differences are exponential transformation of the individual parameter estimates.
Wage equations (1) and (9) were also estimated including a dummy identifying whether a noncitizen possessed traits matching six of the nine undocumented worker characteristics proposed by Borjas (2017). The CPS-Org files do not allow for identifying the three remaining traits used by Borjas. These wage results mirror those presented in this study and are available from the authors upon request.
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The authors are grateful for the comments and suggestions of Steven Trick. We also thank the Diversity Initiative for Tenure in Economics program at Duke University for their support.
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Hill, N., McGregory, R. & Peoples, J. Noncitizen Employment and the Wages of Healthcare Support Workers in the US. J Labor Res 39, 433–461 (2018). https://doi.org/10.1007/s12122-018-9276-9
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DOI: https://doi.org/10.1007/s12122-018-9276-9